A former editor for Forbes and the Financial Times, Eamonn Fingleton spent 27 years monitoring East Asian economics from a base in Tokyo. In September 1987 he issued the first of several predictions of the Tokyo banking crash and went on in "Blindside," a controversial 1995 analysis that was praised by John Kenneth Galbraith and Bill Clinton, to show that a heedless America was fast losing its formerly vaunted leadership in advanced manufacturing -- and particularly in so-called producers' goods -- to Japan.
His 1999 book "In Praise of Hard Industries: Why Manufacturing, Not the Information Economy, Is the Key to Future Prosperity" anticipated the American Internet stock crash of 2000 and offered an early warning about the abuse of new financial instruments.
In his 2008 book "In the Jaws of the Dragon: America’s Fate in the Coming Era of Chinese Hegemony," he challenged the conventional view that China is converging to Western economic and political values.
His books have been translated into French, Russian, Korean, Japanese, and Chinese. They have been read into the U.S. Senate record and named among the ten best business books of the year by Business Week and Amazon.com.

U.S. Decline: An Open Letter to a Closed Mind

Here is a question for Senator Ron Johnson of Wisconsin: do you care how you will be remembered by your grandchildren?

My guess is, yes, of course, you do. Certainly you seem like a decent person – the sort of public representative who sincerely aspires to build a better tomorrow. Yet the other day you said something that in the fullness of time will make your grandchildren cringe. You were asked why Washington seems so unconcerned about America’s huge trade deficits. You answered: “There is no discussion of our trade deficits because they don’t matter. We could make this go away by simply devaluing our currency.”

This is a bit like someone who, having been told his house is on fire, says there is no rush. He’s going fishing and can easily attend to the problem when he gets back.

The basic fact is inescapable. Every extra dollar of current account deficit incurred by the United States is another dollar that has to be funded by foreigners. Typically these days that means huge purchases of U.S. Treasury bonds by sovereign wealth funds. In plain English, foreign governments – and in even plainer English, the authorities in Beijing – are propping up the United States. Washington’s dependence on East Asian money is now more abject than the Ottoman empire’s dependence on British, French, and German financing a century ago. To say the least the grandchildren of the Ottoman empire’s late-era leaders had more reason than most to be ashamed of their antecedents’ incompetence. The same will be said of the grandchildren of today’s Washington elite.

The view that trade deficits don’t matter is now, of course, conventional wisdom in Washington. This may owe something to the fact that it has long been promoted by lobbyists for the governments of Japan, Germany, South Korea, China, and other major exporting nations (odd, isn’t it, that nations that seem so eager to export to the United States simultaneously are so eager to tell Americans that trade does not matter?).

As for Johnson’s idea that a devaluation of the dollar is all that is needed to restore balance to international trade, this is an extraordinary anachronism. There once was a time when devaluation would have worked but that was in the early 1970s. Those of us with a long memory – speaking for myself I actually covered the story – remember the Smithsonian agreement of 1971. Nixon devalued the dollar by something less than 20 percent (the percentage was different depending on the currency) and within 18 months American trade was back strongly in the black.

By the mid-1980s, however, devaluation’s efficacy as a cure for American trade imbalances was already obsolete. Thus when in the Plaza Accord of 1985, the Reagan administration agreed to devalue the dollar by 50 percent against the Japanese yen, the net effect was for America’s current account deficits to RISE. The problem was that already then the United States had become so hollowed out that it had few manufacturing industries left to benefit from devaluation. On the principle that you can’t get blood out of a stone, you can’t get exports out of a non-existent export sector. All the great “exporters” of the American popular imagination – GE, Boeing, Caterpillar, United Technologies, Apple, and so on – have actually long been huge importers. Even as far back as the mid- to late-1980s many of their products were largely or totally foreign-made. Specifically much of their most high-value precision manufacturing had long been done in places like Japan, Germany, Korea, and Taiwan.

The problem for the United States can be summed up in three facts:

Manufacturing is now down to just 11 percent of GDP (from around 30 percent in the Nixon era).

Services do little or no exporting.

The current account deficit runs 3 to 5 percent of GDP (up from less than 0.5 percent at its weakest in the early 1970s).

How can such a vestigial manufacturing sector ever close the gap? Below is the best Senator Johnson can do by way of reply:

“I believe American workers and consumers benefit from international trade. Exports create millions of jobs for American workers. Access to goods manufactured abroad and raw materials from overseas guarantees consumer choice and competitive prices. As long as we make sure governments aren’t putting their thumbs on the scale, I know that Wisconsin exporters will prevail.”

Let’s be frank. Johnson’s defense is pious poppycock. He predicates his view on the condition that “we make sure governments aren’t putting their thumbs on the scale.” What a quaint idea. The United States in the 1970s might have had the power to tell foreign governments what to do. The problem today is that United States must go cap in hand for funding to those same governments whose thumbs are on the scale.

Welcome to the real world Senator Johnson – a world where Washington has long since lost the ability to talk back to its creditors. It is past time you recognized that it is not 1971 anymore. And past time you did something to ensure that the society your grandchildren will inherit will look something like the society your grandparents built.

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This President has been no worse or better than any other in recent times. He gets a lot of blame from the right and that’s their job to make him look bad but all things considered he’s about par with the rest. The real problem is the lack of manufacturing. All the big companies moved their operations over seas to enhance profits. The shareholders and the CEO’s are the greedy ones. Those people are what is driving this country into the ground. Between the insurance companies doing nothing to earn a dime and investors wanting more for doing nothing, billions are going to people that make money simply by having money. And they are making it off of the people with the least amount of money. No wonder no one can save any money, insurance and rising costs for products so that investors can get bigger dividends are keeping most Americans broke

I agree with a lot of what you wrote, but it is not really about CEO greed. It is more about a system which allows CEO greed to not only be profitable, but also to affect the political system.

We have had massive amounts of propaganda and advertising from groups like the Chamber of Commerce and the Heritage foundation pushing bad math that doesn’t work, but does tend to make CEOs more money. It has gotten to the point where this economic wormwood has become our undergraduate economics curriculum at many of our top universities. Look up Mankiw if you don’t believe me.

Political ideology has replaced common sense in Washington, making Ron Johnson part of the problem and not part of the solution. This president is no worse and no better than any of the other presidents before him. What is different is the amount of obstructionism and lack of respect shown the office.

Politics is a dirty business. It is easier to point fingers, to blame the other guy for the woes of the country.

Politics is not about working for the betterment of the country, it is about getting elected. Those old enough to remember Gilligan’s Island will remember an episode where the castaways held an island election. One of the campaign slogans was “I promise you this, that and the other thing,” That is the face of politics today. It is not, as I stated earlier, about helping the country, it is about the getting the job.

President Kennedy said, “Ask not what your country can do for you; ask what you can do for your country.” They were wise words, but they have fallen on deaf ears. Had we been really listening, we would have demanded more from those who promise us everything and deliver nothing.

Aesop, taught us in his fable; “The Four Oxen and the Lion,” that united we stand, divided we fall, but the very opposite is what every politician seeks to maintain for division makes the job all the more attainable.

Right. President Obama slashed taxes and eliminated the budget surplus used by President Clinton to start paying down Reagan’s debt then started two unfunded wars costing trillions, pushed through an unfunded prescription drug benefit for Medicare, pushed No Child Left Behind filled with unfunded mandates, and tried to privatize Social Security to complete the gutting of the New Deal, and appointed people to the SEC and a lot of other regulatory agencies who refused to do their jobs so that Wall Street could do any damn thing it wanted, then when all hell broke loose in 2007 and 2008, pushed through a 900 billion dollar bailout.

Yeah, Obama did all that. Republicans tried to stop him from 1996 to 2006, but he was such a powerhouse he did all that before he was even elected president. Republicans are definitely the good guys with nothing but clean hands and fresh underwear. They are utterly blameless for the mess we’ve been in for the past 17 years. It was all those awful, awful socialists.

When you pull your head from your rectum, you might want to wash your face. It has some stinky streaks of denial and ignorance on it.

Where do budget deficits come from? It sounds like you’re advocating an extreme lack of revenues or resources that America used to have? There is no need to fix that issue? You see no connection between our budget and trade dificits? Where are you? Can’t you see this mentality of thinking can and will lead directly to the eventual loss of all profits and wealth for American companies? It’s not just about those li’l folks on the bottom that many think they can turn away from and ignore their plight. Those li’l folks on the bottom are actually the perfect gage for future financial health of the wealthy. Some people are SO overly focused others they care nothing about they can’t even see thier own self created demise!

American corporations are doing just fine thank you. They are sitting on billions in cash. Check out their balance sheets. In most cases profits are up and yet they still lay off people so they can keep their profits even higher next quarter.

David: Nonsense! President Obama has been attacked by the Right, and for a very good reason: he is both a liar and a hypocrite!

Before becoming president, Obama railed on Bush for spending. He said Bush was over-spending, and charging it to the credit card of China, for our children and grandchildren to pay off. Over EIGHT YEARS, Bush added $5 TRILLION in new debt. His deficit spending averged $450 BILLION a year, for the 8 years he was in office.

And Obama? He has added nearly $7 TRILLION in new debt, and AT LEAST doubled deficit spending, to levels of at least $1 TRILLION plus, each at every one of the FOUR YEARS this clown has been in office. Obama led everyone to believe he would be a better steward of our money, while in fact, he is worse.

Also, I want to correct you: the reason companies moved operations overseas is to remain competetive, and avoid bankruptcy. We operate in a global economy, competing against companies in countries where there are no unions or minimum wage. If these overseas companies make a similar product as an American company, and they do so more cheaply because of LOWER WAGES, how can we compete? Answer: level the playing field and move to where these other companies operate!

And companies are tired of Uncle Sam interfering, and ramming rules and regulations down their throats (e.g. – Obama Care costs). Plus, the corporate tax structure is one of the highest in the world. Bottom line: the U.S. is hostile to businesses – especially the current administration, who thinks spending is great, and that you should simply tax the living hell out of corporations, and Americans who work hard, and produce.

Well gee…. let’s see now. We are a country of 315 million, produce virtually nothing, all our jobs are offshore, millions of unemployed and underemployed and you, in good conscience, gleefully point your finger at budget deficits and spending?

Uh…do you think the narrowed tax base MIGHT have something to do with it? Those folks who aren’t working are on entitlements or are in the process of getting sick due to the lack of health care and bad diets and are getting ready to get on the entitlement gravy train. What..??? Cut entitlements??? Really? Dude, entitlements are a bargain. Even if we pay them $18,000.00 to do nothing by keeping them on welfare, it’s cheaper than putting them in prison costing the taxpayer $35k yr. At least when they are on the outside, they are consuming goods and services and maintaining a circular flow in the economy. In prison, they won’t.

Think about it.

Now…is there anymore jobs we can send offshore so we can get more people on entitlements?